The other day, we were talking to an insurance agent about our spa/salon/medispa liability coverage and a topic came up that we feel very passionate about – especially when it comes to this industry. The agent asked, “are you a Risk Retention Group?” He obviously knew what a RRG was and wanted to steer clear of such a company. Unfortunately, most spa, salon, and medispa owners are not aware of what a RRG is and why they should be avoided.
ABE is classified as a Risk Purchasing Group (RPG) in the insurance world. With over 1,300 members across the nation, we can leverage our position to negotiate wholesale rates with insurance underwriters.
Our association, ABE, offers a number of programs to our members. Marketing, certification, and equipment are key offerings, but our insurance program is perhaps what we’re best known for. ABE is classified as a Risk Purchasing Group (RPG) in the insurance world. With over 1,300 members across the nation, we can leverage our position to negotiate wholesale rates with insurance underwriters. This is an important distinction, because it shows that a RPG is backed by a large, solvent, accountable insurance company. A Risk Retention Group (RRG) is the opposite.
It completely contradicts the rationale of purchasing liability coverage.
A risk retention group is essentially self insurance. Individuals engaged in the same industry pool their money together and are insured through a policy controlled by the group’s’ management company. The insurance is not backed by anything other than the RRG owners and perhaps some reinsurance. Some risk retention groups are well run and funded, but most have a terrible reputation for paying claims. That’s why you’ll find so many cases online of RRG’s actually suing their own insured’s over paying a claim. It completely contradicts the rationale of purchasing liability coverage.
When you’re shopping for liability coverage for your spa/salon/medispa, keep in mind that not all providers offer the same quality of product. RRGs are successful because they target the most basic instinct of business owners: how much does this cost? They’ll often mask their business structure in fine print or through holding company names, but there are a few ways to spot them. Look for too-good-to-be-true premiums. If it’s not spelled out on their website or your policy, ask who the guarantor of your policy is. If you have any questions about our insurance program or would like to take advantage of our free Coverage Analysis, visit our website www.alliedbeautyexperts.net or call 800.444.7546.